N.B. to hike HST?

N.B. to hike HST?

In Brief:The New Brunswick government has suggested it may raise the provincial portion of the HST in order to offset the federal reduction planned for the new year. AIMS acting President Charles Cirtwill points out that such a move contradicts the government’s drive for self-sufficiency.

FREDERICTON – New Brunswickers waiting until after the holidays to make large purchases in order to benefit from the anticipated cut in the GST might be out of luck as the provincial government won’t rule out increasing its sales tax.

Finance Minister Victor Boudreau said the province is still considering its options — including clawing back the benefits New Brunswickers would receive from the cut promised by Ottawa.

“We’re still looking at all options,” he said. “We have to transform our fiscal framework to be competitive if we want to move forward with our self-sufficiency agenda. So all options, I guess, are on the table.”

The federal government has indicated it plans to cut the GST by one per cent effective Jan. 1. However Boudreau is still mulling the possibility of raising the provincial portion of HST to offset the federal cut.

The provincial government doesn’t lose any money when the federal government cuts the GST so the increase would simply be a means to increase revenue for the province.

Boudreau didn’t say when New Brunswickers could expect to see the provincial sales tax increase if government decides to go ahead with that option, saying raising it for Jan. 1 might cause confusion for retailers.

“We haven’t finalized what our tax reform is going to be yet so it’s still an option that’s there but we haven’t made any decision yet.”

This isn’t the first time Boudreau has suggested a hike in the sales tax. Earlier this year a media report said Boudreau mused about offsetting the GST cut. The finance minister quickly responded, saying an increase wasn’t an option being considered by the province.

Shortly after Boudreau’s comments, Premier Shawn Graham didn’t rule-out the possibility of an increase, but did say the option hadn’t been discussed and the province would continue to review its taxation policies.

Charles Cirtwill, acting president of the Atlantic Institute of Market Studies, said Boudreau is playing the role of the Grinch.

He also said the idea of raising taxes contradicts the progress the government has taken with its self-sufficiency agenda.

“The fact that this government can’t get its head around the idea that raising taxes scares people away is amazing to me,” he said. “I just can’t believe that they’re talking about another tax grab.”

Cirtwill said even though the federal government should have cut income tax — not sales tax — it would be unwise for the province to increase its portion of the HST.

Because of the way HST works, the province would need the approval of Ottawa, Nova Scotia and Newfoundland in order to raise the tax. That makes Boudreau’s mumblings more peculiar, said Cirtwill.

“If you’re going to put out trial balloons, this is not the one you want floating around,” he said. “This is especially not the one you want floating around just before Christmas and with voters who quite honestly seem to be very positive towards this tax change.”

Valerie Roy, CEO of the Greater Moncton of Chamber of Commerce, said government should be reducing taxes, not increasing them.

In an e-mail exchange, Roy also said retailers are fully responsible for the costs of collecting the HST and the chamber believes the federal government should provide a rebate to help cover the expenses.

However, she said government should be focused on lowering corporate and personal income taxes — not sales tax.

Opposition leader Jeannot Volpé said he’s not surprised by Boudreau’s comments, given the Liberals raised income taxes in the last budget.

“I wouldn’t be surprised — they feel it’s their money. That’s the Liberal way — they know better,” he said.

Volpé said the Liberals are likely trying to raise money to pay for their self-sufficiency agenda — a plan he says lacks benchmarks and costing.

“You need to leave some money to the people so they can decide what to do with it.”